Below are 10 differences between a Sacco and a Bank:

  1. Banks emphasis is on business and consumer accounts while Sacco’s/Credit unions emphasis is on member deposit and loan services
  2. Banks are for-profit making financial institutions owned by people or private investors and governed by a board of directors chosen by the shareholders.
  3. Saccos are non-profit financial cooperatives owned by their members and governed by a board of directors elected by, and from among, those members.
  4. Usually there is a common bond among the members of a Sacco, such as belonging to the same organization or living in the same geographical area. It is not the case with bank owners.
  5. In a Sacco ownership every member is an equal owner while banks ownership depends on the number of shares a shareholder owns.
  6. Sacco Boards of Directors are elected by members. They are volunteers, and are not paid salaries but given a minimal sitting allowance, if and when the Sacco can afford to do so. Banks Boards of Directors are elected by the shareholders. They are paid and legally bound to make decisions that benefit the shareholders.
  7. Sacco/Credit union elections are held annually with each member getting a single vote regardless of their amount of savings. Bank owner’s number of votes depends on the shares holdings.
  8. In Sacco’s, no single member is allowed to own more than 25% of the totals shares while in a Bank there is no such restrictions, one may own as many shares as they wish.
  9. Sacco’s always offer competitive fees and lower interest rates on loans to their members than banks do to their customers, because Saccos are not driven to make profits.
  10. In a Sacco, net profits that are earned are shared between all members inform of dividends, based on a member’s shareholding percentage, while in a bank, only the shareholders receive a share of the profits.





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February 11, 2024

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